User Account

All Pages

Prepare entries to record the lease and first lease payment

Assignment Help Accounting Basics
Reference no: EM132600861

Question - Truck Leasing Company (TLC) buys trucks for leasing to various delivery companies. On April 1, 2010, TLC leases a truck to Showman Delivery Company. The cost of the truck of $289,875 and its fair value were the same. The lease payments stipulated in the lease are $40,000 per year in advance for the 10-year period of the lease. The expected economic life of the equipment is also 10 years. The title to the equipment remains in the hands of TLC at the end of the lease term, although only nominal residual value is expected at that time. Showman incremental borrowing rate is 5%, and it uses the straight-line method of depreciation on all owned equipment. Both Showman and TLC have fiscal year ending March 31, while lease payments are made on April 1 each year.

Required -

1. Determine the rate implicit in the lease.

2. Determine the present value of the minimum lease payments for the lessee.

3. Prepare the entries to record the lease and the first lease payment on the books of the lessor and lessee, assuming the lease meets the criteria of a direct financing lease for the lessor and a capital lease for the lessee.

4. Other than those at (c) above, prepare the entries required to account for the lease on both the lessee's and lessor's books for the fiscal year 2011.

Reference no: EM132600861

Questions Cloud

PUBH6003 Health Systems and Economics Assignment : PUBH6003 Health Systems and Economics Assignment Help and Solution, Laureate International Universities - Assessment Writing Service
What basis should future salary payments be made to julian : On what basis should future salary payments be made to Julian's wife? Julian and Jenna carry on a partnership business and for the income year ended 30 June
Will julian wife be required to pay tax : Will Julian's wife be required to pay tax on $2,000, or $12,000, for the current income year. Why? Julian and Jenna carry on a partnership business.
Effect of expansionary fiscal policy : Central banks can effectively neutralize (cancel out) the effect of expansionary fiscal policy by increasing the money supply.
Prepare entries to record the lease and first lease payment : Determine the rate implicit in the lease. Prepare the entries to record the lease and the first lease payment on the books of the lessor and lessee
Private equity firm acquisition of manufacturing : Explain the impact of private equity firm acquisition of manufacturing and retail firms.
What is the change in the rate of return of bill : What is the change in the rate of return of this bill? Round your answer below to 1 decimal place
What course of action is available to the partners : What course of action, if any, is available to the partners in disputing the assessment? Julian and Jenna carry on a partnership business and for income year.
List of possible causes for unemployment : -Explain an experience that someone you know, including yourself, had with unemployment. Think about the reason for the unemployment, and how long it lasted.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Customers on account during october

On October 1, theaccounts receivable account balance was $115,800. During October, $449,600 was collected from customers on account. Assuming the October 31 balance was $130,770 determine the fees billed to customers on account during October.

  Best buy does not include potentially dilutive shares

Best Buy does not include potentially dilutive shares when calculating EPS for the twelve months ended March 3, 2012. Why not

  Area company purchased a delivery van at a cost of 30000

area company purchased a delivery van at a cost of 30000 cash on january 1 2013. the van has an estimated useful life

  Pryce company owns equipment that cost 62400 when purchased

pryce company owns equipment that cost 62400 when purchased on january 1 2011. it has been depreciated using the

  Managerial reporting of standard variance

Should this managerial reporting of standard variance practice be permitted to continue.

  Negative opportunity costs can opportunity costs be

negative opportunity costs can opportunity costs be negative? give an example p 2-5 j.p. max department stores j.p. max

  Sahara desert homes sdh reports under ifrs and constructed

sahara desert homes sdh reports under ifrs and constructed a new subdivision during 2008 and 2009 under contract with

  Compute the total materials variance and the price and

the standard cost of product b manufactured by mit company includes 3.00 units of direct materials at 5.00 per unit.

  What the production budget show in costs for that period

The standard costs for a manufacturing business are $12 per unit for direct materials, What will the production budget show in costs for that period

  How to record journal entries of sale and warranty costs

On January 1, 2017, Cullumber sold on account 1,400 units of its product for a total price of $557,000, How record journal entries of sale and warranty costs

  Read case and apply knowledge of the five components

Read the following case. Apply your knowledge of the five components of the 2013 COSO IC framework as well as risk, internal controls

  Is externally reported financial information always precise

Is externally reported financial information always precise and accurate?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd